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Iran Sanctions that Iran has lost $60 billion in investment as numerous major firms have either announced pullouts from some of their Iran projects, declined to make further investments, or resold their investments to other companies. It is therefore highly unlikely that Iran will attract the $145 billion in new investment by 2018 that Iran’s deputy Oil Minister said in November 2008 that Iran needs. Similar estimates come from independent Iranian energy experts, who say that, as of October 2011, the sector needs $130 billion in investment from 2011 until 2020. 54 Observers at key energy fields in Iran say there is little evidence of foreign investment activity and little new development activity sighted, including at the large South Pars gas field that Iran has focused on for at least 10 years. Still, according to the Energy Information Administration, Iran’s oil production has risen slightly (about 4 million barrels per day) and net exports have not fallen significantly, if at all, over the past five years. 55 It might take several years for the lack of investment to show up in declining Iranian oil production. Production is projected to fall to about 3.3 mbd by 2015. 56 That estimate is somewhat less than the 25% decline over the next five years (by 2016) that the GAO August 3, 2011, report, quoting Oil and Gas Journal, estimates is possible. Others maintain that Iran’s gas sector can compensate for declining oil exports, although Iran has used its gas development primarily to reinject into its oil fields rather than to export. Iran exports about 3.6 trillion cubic feet of gas, primarily to Turkey, but also to Armenia. Some Members of Congress believe that ISA would have been even more effective in injuring Iran’s energy sector if successive administrations had imposed ISA sanctions more aggressively. A Government Accountability Office (GAO) report of August 3, 2011, contains tables that discuss those firms that have discontinued commercial activity in Iran’s energy sector, as well as those still operating and investing. 57 Table 3 shows international firms that have invested or remain invested in Iran’s energy sector. Some of them have not been determined to have violated ISA and may be under investigation by the State Department. As discussed above, some firms have been sanctioned, and others have avoided sanctions either through Administration waivers or invocation of the “special rule.” The EU sanctions apparently have also derailed a BP-NIOC joint venture in the Rhum gas field, 200 miles off the coast of Scotland. BP announced in November 2010 that it would stop production there to ensure compliance with the EU sanctions. In addition, partners in the Trans- Adriatic Pipeline (TAP) said in September 2010 that the pipeline would not be used to transport Iranian gas to Europe. Concerns About “Backfill” There has been a concern that some of the investment void might be “backfilled,” at least partly, by Asian firms such as those from China, Malaysia, Vietnam, and countries in Eastern Europe. However, many such deals are said to be in preliminary stages, and clear examples of 54 Khajehpour presentation at CSIS. Op. cit. 55 http://www.eia.gov/cabs/iran/Full.html. 56 http://online.wsj.com/article/SB10001424052748704569204575328851816763476.html. 57 GAO. GAO-11-855R. Firms Reported in Open Sources As Having Commercial Activity in Iran’s Oil, Gas, and Petrochemical Sectors. August 3, 2011. Congressional Research Service 47
Iran Sanctions “backfilling” are few, to date. Most of the companies that might backfill abandoned projects are perceived as not being as technically capable as those that have withdrawn from Iran. To try to mitigate the trend in Iran has been that the “backfill” is being conducted by domestic companies, particularly those controlled or linked to the Revolutionary Guard (IRGC). Deals with Polish and Russian firms fell apart in late 2011, and their projects reportedly were taken over by domestic Iranian firms. Still, backfill by Iranian firms has potential pitfalls because foreign firms are reluctant to partner with IRGC firms, which are increasingly targeted by international sanctions. In July 2010, after the enactment of Resolution 1929 and CISADA, the Revolutionary Guard’s main construction affiliate, Khatem ol-Anbiya, announced it had withdrawn from developing Phases 15 and 16 of South Pars—a project worth $2 billion. 58 Khatem ol-Anbiya took over that project in 2006 when Norway’s Kvaerner pulled out of it. Table 4. Post-1999 Major Investments/Major Development Projects in Iran’s Energy Sector Date Field/Project Feb. 1999 April 1999 Nov. 1999 Doroud (oil) (Energy Information Agency, Department of Energy, August 2006.) Total and ENI exempted from sanctions on September 30 because of pledge to exit Iran market Balal (oil) (“Balal Field Development in Iran Completed,” World Market Research Centre, May 17, 2004.) Soroush and Nowruz (oil) (“News in Brief: Iran.” Middle East Economic Digest, (MEED) January 24, 2003.) Royal Dutch exempted from sanctions on 9/30 because of pledge to exit Iran market April 2000 Anaran bloc (oil) (MEED Special Report, December 16, 2005, pp. 48-50.) July 2000 Phase 4 and 5, South Pars (gas) (Petroleum Economist, December 1, 2004.) ENI exempted 9/30 based on pledge to exit Iran market Company(ies)/Status (If Known) Value Output/Goal Total (France)/ENI (Italy) Total/ Bow Valley (Canada)/ENI Royal Dutch Shell (Netherlands)/Japex (Japan) Norsk Hydro and Statoil (Norway) and Gazprom and Lukoil (Russia) No production to date; Statoil and Norsk have left project. ENI Gas onstream as of Dec. 2004 58 “Iran Revolutionary Guards Pull Out of Gas Deal Over Sanctions.” Platts, July 19, 2010. $1 billion 205,000 bpd $300 million 40,000 bpd $800 million 190,000 bpd $105 million 65,000 $1.9 billion 2 billion cu. ft./day (cfd) Congressional Research Service 48
Page 1 and 2: Iran Sanctions Kenneth Katzman Spec
Page 3 and 4: Contents Congressional Research Ser
Page 5 and 6: Congressional Research Service Iran
Page 7 and 8: Iran Sanctions ISA has attracted su
Page 9 and 10: Iran Sanctions Later in the 111 th
Page 11 and 12: 4. if the entity is a financial ins
Page 13 and 14: Non-Application to Crude Oil or Nat
Page 15 and 16: Iran Sanctions Nonetheless, energy
Page 17 and 18: Iran Sanctions signed in September
Page 19 and 20: March 29, 2011, Sanctions Determina
Page 21 and 22: Iran Sanctions The following condit
Page 23 and 24: Iran Sanctions which have also rece
Page 25 and 26: Financial Sanctions: CISADA and San
Page 27 and 28: Iran Sanctions Sanctioning Against
Page 29 and 30: February 6, 2012, Executive Order o
Page 31 and 32: Iran Sanctions The Iran-Iraq Arms N
Page 33 and 34: Iran Sanctions in part, against fir
Page 35 and 36: Iran Sanctions Major cases yet to b
Page 37 and 38: Iran Sanctions Freeze the assets of
Page 39 and 40: Iran Sanctions countries have been
Page 41 and 42: Turkey Iran Sanctions Turkey is a l
Page 43 and 44: Iran Sanctions Table 3. Comparison
Page 45 and 46: U.S. Sanctions U.N. Sanctions Sanct
Page 47 and 48: Effect on Nuclear Negotiations Iran
Page 49 and 50: insurance. Further revenue losses a
Page 51: However, press reports citing compa
Page 55 and 56: Date Field/Project October 2004 (ht
Page 57 and 58: Date Field/Project GAO report cited
Page 59 and 60: Iran Sanctions $46 billion to upgra
Page 61 and 62: Iran Sanctions 2105 (“The Iran, N
Page 63 and 64: and significant shareholders if SWI
Page 65 and 66: expel some Iranian diplomats from I
Page 67 and 68: Iran Sanctions Alterations to Waive
Page 69 and 70: Iran Sanctions Sanctioning Certain
Page 71 and 72: Iran Sanctions Brig. Gen. Qasem Sol
Page 73 and 74: Shahid Bakeri Industrial Group (Ira
Page 75 and 76: Iran Sanctions Entities sanctioned
Page 77 and 78: Iran-Related Entities Sanctioned Un
Page 79 and 80: (CAVIM); 16 entities: Belarus: Bela

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